Circle and Ripple Bank Charter Bids Face Pushback from Finance Industry

Leading banking trade groups have requested that the U.S. banking regulator delay decisions on federal bank charters for crypto firms, such as Circle and Ripple.

A coalition of major banking and credit union associations, led by the American Bankers Association, has formally requested that the Office of the Comptroller of the Currency pause its evaluation of national bank license applications submitted by crypto-native firms, including Circle and Ripple.

In a letter sent Thursday, the groups argued that approving such applications could mark a “significant departure” from current federal policy. It cited insufficient public transparency and legal ambiguities around crypto companies’ proposed operations.

Banks Call for Delay in Crypto Charter Decisions

The joint letter, co-signed by multiple financial trade bodies, emphasizes that applications submitted by digital asset firms lack essential details. This absence of information hinders proper public scrutiny.

The groups expressed particular concern over whether these crypto applicants genuinely qualify for national trust bank status. This designation is typically reserved for entities engaged in fiduciary services.

“There are serious legal and policy uncertainties about whether the applicants’ business plans align with fiduciary standards traditionally upheld by national trust banks,” the letter noted.

The organizations highlighted that services like crypto custody, central to Circle and Ripple’s offerings, do not constitute fiduciary activities. Granting such firms federal charters without a public comment period, they argue, would bypass decades of regulatory norms.

Implications for Traditional Banking

If granted, these charters would enable crypto companies to operate nationwide under a single regulatory framework. This would eliminate the requirement for state-by-state money transmission licenses.

Critics fear this could erode existing safeguards. They also worry it might open the door for non-traditional financial firms to offer services such as payments and custody with fewer capital constraints.

“This change could pose material risks to the U.S. financial system,” the letter warned.

Custodia Bank founder Caitlin Long weighed in on the controversy via X (formerly Twitter). She called the banking groups’ pushback “an interesting reaction.”

Caitlin suggested that if trust charters offer lower regulatory hurdles, traditional banks may consider converting to similar models. This shift could help them reduce compliance costs.

Crypto Sector’s Regulatory Strategy Evolves

The debate comes amid growing interest among crypto-focused firms in securing formal banking licenses. Fidelity, Ripple, and Circle are among several crypto asset companies seeking federal charters to enhance payment speed, expand market access, and simplify compliance.

Logan Payne, a legal expert in blockchain regulation, noted that recent federal legislation, such as the GENIUS Act, which created a stablecoin-specific license, may unintentionally prompt firms to pursue broader banking licenses to maintain operational flexibility.

“Most stablecoin issuers conduct business that goes beyond the new license’s limited scope,” he explained. Traditional banks are primarily concerned about rising competition in the financial sector. 

“Credit unions and banks rarely agree on anything,” said Alexander Grieve, head of government affairs at crypto VC firm Paradigm. “But they seem united in pushing back against crypto entering their space.”